Dollar falls on strong European manufacturing data

NEW YORK 
The dollar fell against the euro and other major currencies Monday as strong manufacturing data from Europe reassured investors.

The dollar is the most heavily traded currency in the world, making it easy for investors to quickly buy or sell when markets are shaky. Investors are treating the dollar as a safety purchase, and it has rallied this year amid economic problems in Europe and fears of a slowdown in China.

The euro rose to a 2-week high at $1.2298 in Monday trading from $1.2077 late Friday, but pulled off of its highs after credit ratings agency, Moody's Investors Service, slashed Greece's credit rating to "junk" or non-investment grade status. In late afternoon trading, the euro bought $1.2243.

The euro hit a four-year low below $1.19 last Monday and has dropped more than 15 percent this year.

The European Union said that industrial production in the 16 countries that use the euro rose 0.8 percent in April, a bigger increase than economists had expected. That eased concerns that government spending cuts aimed at slashing debt will hurt Europe and slow a global recovery.

The data followed other positive news last week about trade and the European financial system. China's imports and exports each surged nearly 50 percent in May, calming worries that Europe's problems would deeply affect world trade. A note from Moody's Friday said that European banks' exposure to public and private debt of distressed European countries, such as Greece, was "manageable."

Moody's downgrade of Greece's debt Monday came as little surprise to investors.

"Greece is not expected to have to come back to the capital markets to raise funds any time soon," said Marc Chandler of Brown Brothers Harriman. The downgrade had little impact because the European Central Bank "already has indicated it will accept Greek bonds as collateral no matter what rating is assigned," he said.

The British pound gained to $1.4771 from $1.4514 late Friday, and the dollar fell to 1.1409 Swiss francs from 1.1505 francs.

The U.S. currency dropped to 1.0302 Canadian dollars from 1.0370 Canadian dollars. It fell versus other currencies of big commodity exporters, such as Brazil, Australia and Norway. Commodity currencies tend to benefit from a more positive outlook on the global economy. Higher expectations for production and consumption suggest that factories would need more supplies and shippers would need more fuel, driving up demand for commodities.

The dollar rose to 91.52 Japanese yen from 91.60 yen in New York, however. Investors also treat the yen as a safe haven.